Mikael La Ferla on Why Cash Flow Matters More Than Profit for Philadelphia Small Businesses

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A business can make a profit on paper and still have trouble paying its bills. According to Mikael La Ferla, understanding that difference is one of the most important parts of running a small business.

Profit is what remains after a business subtracts its expenses from its revenue, and cash flow is the actual money coming into and leaving the business.

The difference matters because revenue does not always mean cash has been collected. A contractor might finish a $20,000 project and record the revenue, but if the customer does not pay for 60 days, that $20,000 is not available to cover payroll, rent, insurance, or other bills today.

This is especially relevant for Philadelphia-area businesses. The Federal Reserve Bank of Philadelphia's 2025 Small Business Credit Survey found that 63% of small businesses in the Philadelphia metro described their financial condition as poor or fair in 2024, up from 57% the previous year. Businesses also reported problems paying operating expenses and dealing with increased costs.

For Mikael La Ferla, this is why business owners need to look beyond whether they made a profit. A company should also know how much cash it has, what customers still owe, which bills are coming due, and whether enough money is available to cover them.

The U.S. Small Business Administration recommends using financial records to understand money coming in and going out and specifically identifies cash-flow projections as an important part of financial management. Regular bookkeeping gives owners the information needed to see those numbers clearly.

This is the approach behind La Ferla Accounting. Founded by Mikael La Ferla, the Philadelphia-based bookkeeping and accounting business helps small businesses and real estate owners with monthly bookkeeping, bank reconciliations, financial reporting, accounts payable, and other accounting needs.

La Ferla's focus on everyday financial visibility also extends beyond business accounting. He founded Shopden, a personal finance and expense-tracking application designed to help consumers better understand where their money goes.

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